Tuesday, January 12, 2010

The NFL Goes to Court

The NFL.MLB.The NBA.The NHL.

The major professional sports leagues in America need no introduction (well, maybe the NHL needs one, but that’s neither here nor there).All four have inspired countless hours of heated and in-depth discussion regarding the best players, the greatest teams, and the most memorable games.Relatively little, however, is spoken about how these leagues operate and function as major business organizations.

Tomorrow, that will change.

In oral argument before the U.S. Supreme Court, petitioner American Needle will challenge the National Football League over “single entity” principles of the Sherman Antitrust Act.

In May 2001, the NFL signed an exclusive license with Reebok to produce team headwear (notice how every NFL player is wearing identically styled hats while standing on the sideline?).Prior to the agreement, individual teams were free to choose their own suppliers for team merchandise.Afterwards, former producers were excluded from the market (and, hence, the ability to make money each time a fan buys a hat).Not surprisingly, one of the former producers, American Needle, filed suit against the NFL.

While the issue of hat sales may not excite the average fan, the potential implications of this case run far beyond logo-adorned headwear.Each NFL team, both on the field and off, is its own organization.Each team makes its own personnel decisions, provides for its own stadium accommodations, and will enter into their own advertising agreements.However, as American Needle alleges, when the NFL signed the exclusive agreement with Reebok, it acted as a single entity as opposed to being an association of 32 individually owned teams that make their own business decisions.

The Player’s Association fears that a decision in favor of the NFL will allow the league to act as a “single entity” to restrain competition in the market for player services (in other words, free agency may be radically altered or end altogether).Further, what might it say to the inherent competitiveness of the game if team owners are acting far more in concert rather than in opposition?

Not surprisingly, MLB, the NBA, and the NHL filed amicus briefs before the court in support of the NFL’s position.Hence, any broad based opinion could have sweeping implications across professional sports (the NCAA also filed a brief in support…readers can draw their own conclusions).

For a more in depth take on the matter, scotusblog.com (a blog that follows the activities of the Supreme Court) published a very readable account of the case and the potential leanings of the Court.Also, last Saturday, the Washington Post published an Op-Ed on the matter written by Drew Brees, the starting quarterback for the New Orleans Saints.Finally, Gwen Napp, a columnist for the San Fransisco Chronicle, wrote here a response to Brees’ op-ed and included an interesting list of the implications that could arise from the case.

(Also, it may be worth paying special note to the role of the newest justice to the Court, Sonia Sotomayor, during oral argument. During her time on the Second Circuit Court of Appeals, Sotomayor came down hard on MLB owners to end the strike of 1994.)